The SMSF Professionals’ Association of Australia (SPAA) has encouraged trustees to take advantage of strategies that can minimise tax liabilities before 30 June.
The strategies referred to include making post-tax contributions and the ability of individuals aged 60 and above to take advantage of the higher concessional contributions caps.
In reference to the latter, SPAA technical and professional standards director Graeme Colley pointed out SMSF trustees in the over 60 demographic had access to a concessional contributions cap of $35,000 as opposed to the standard $25,000.
“These contributions include amounts you make as salary sacrifice, the superannuation guarantee or, if you qualify, personal deductible contributions. If you want to maximise your contributions before 30 June, make sure you talk to your accountant, tax agent or professional adviser so that your salary sacrifice agreement with your employer allows the maximum to be salary sacrificed,” Colley said.
He emphasised the fact trustees above the age of 60 needed always to be mindful that most lump sums paid out of superannuation benefits were tax free.
“However, before age 60, any lump sums that include a taxable component can be taxable. The taxable component includes the tax deductible contributions plus any income that has accumulated in your superannuation benefit. No tax is payable on taxable amounts of up to $180,000, in total, you receive before age 60. This amount is indexed annually,” he said.
In regard to making greater non-concessional contributions, he suggested they might be able to come from personal savings, an inheritance, or the transfer of personal investments.
“This financial year the maximum personal after-tax contribution is $150,000, however, if you are 65 or under, you can contribute up to $450,000 over a three-year period,” he said.
“This allows you to make substantial contributions to super and build your retirement savings. But remember, while this is a real bonus, it’s critical not to exceed the after-tax contributions caps because there can be tax penalties as high as 46.5 per cent.”
Trustees should exercise caution over the triggering of the bring-forward provisions of the non-concessional contributions caps as delaying that trigger until after 1 July meant trustees would be eligible to contribute $540,000 in total compared the current limit of $450,000, he said.
